Linking PAN with Aadhaar: Tracking the Habitual Tax Defaulters

Aadhaar project is the result of a poorly-monitored and poorly-designed process that neglected security or control.

From the days of good old ration card to Aadhaar card, the citizens of India have indeed come a long way in terms of defining their identities. The journey has seen a few milestones like the General Index Register Number (GIR), which was replaced by old PAN series in 1972, and a new PAN series in 1996. Aadhaar was launched in 2009 by the UIDAI, thus mapping the country with a secured single ID .

With a reach of 1.13 billion as on 31 March 2017, Aadhaar is the world’s largest citizen identification system today, thus decimating the PAN as an ID. Undoubtedly, it was a perfect temptation for the government to encapsulate the taxpayers within the fold of Aadhaar.

Hence came the recent announcement – an initiative to link Aadhaar with PAN, with an aim to curb frauds. Some are misled into creating multiple identities with the intention of tax evasion, and of course, expand the headcount of taxpayers by shadowing the transaction trail.

Aadhaar Offers Foolproof Security

The biometric feature in Aadhaar makes it extra secure as compared to any other identity proof. As per the announcement, the taxpayers have to mandatorily link their Aadhaar to PAN, ahead of filing of tax returns for the FY 2016-17 (AY 2017-18).

It’s a step-wise process as explained below:

Step #1 Log on to the e-filing portal of the Income Tax Department by entering your login ID, password and date of birth.

Step #2 After logging on to the site, a pop-up window will appear, prompting to link the PAN card with Aadhaar.

Step#3 Details such as the name, date of birth and gender will already be mentioned as per the details submitted at the time of registration on the e-filing portal.

Step#4 Verifying the details with that mentioned in the Aadhaar card.

Step#5 Entering the Aadhaar number and pressing the link button to complete the process.

Tracking Tax Defaulters

The process would not take more than a minute-and-a-half. If the details don’t match due to reasons like punctuations in name, father’s name/spouse’s name, date of birth or address, a corrective action would surely be required, wherever the error exists.

For an error on PAN card, the taxpayer would have to log on to to the NSDL (National Securities Depository Limited) portal, and submit a request for correction.

For an error in Aadhaar card, the taxpayer must contact the nearest Aadhaar centre for rectification. A mismatch will not link the Aadhaar, as is being apprehended by thousands of taxpayers, who may have found varying particulars between Aadhaar and PAN.

With approximately 250 million PAN card holders in India, and around 50 million taxpayers, there would still be 200 million simple PAN card holders who would be required to link their PANs with Aadhaar before 31st December 2017.

It is pertinent to note that such a large quantum of PAN card holders who don’t file tax returns may be existing for two reasons:

A. They may have procured a PAN for various reasons like opening a bank account, sale or purchase of vehicle, purchase of mutual funds, purchase or sale of immovable property exceeding Rs 10 lakh, cash deposit exceeding Rs 50,000 in a single day, opening a demat account etc, or,

Shouldn’t Compromise on Privacy

It is apparent that the government is gradually moving towards a single identity for all the citizens. This would undoubtedly tighten the screws on tax evaders with minimal escape routes in addition to doing away with multiple identity cards in one’s wallet. That day doesn’t seem far when quoting Aadhaar would be mandatory for more and more transactions.

At the same time, it is up to the government to ensure a sound IT network which is comprehensive, and of course, hack proof without compromising a citizen's privacy. No digital system, in such a vast country comprising of 1.3 billion, can function unless the enforcement agencies and personnel are trained to be diligent and honest while trying to enforce the mandate of the government.